Imagine that you’re about to hire someone to provide a service—say, to repair your leaky roof, design a new website for your business, or host an online event. In such everyday negotiation situations, when you receive a price quote, should you try to negotiate a better deal?
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Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.
contract negotiation
What is Contract Negotiation?
A contract negotiation can be the source of strength in a relationship or a pivot upon which negotiated agreements fall apart
It can be tempting to rush through a contract negotiation process, file the document away quickly, and roll up your sleeves. But the best negotiators pay attention to the details.
When business negotiators don’t devote enough attention to ensuring that a contract negotiation leads to a sound long-term deal, the unfortunately common outcomes are broken contracts, damaged relationships, and lawsuits.
This may be especially true in labor relations where there are rarely clear cut or mutually agreed upon notions of what a fair salary and benefits package would be. Nor is a labor contract negotiation usually limited to questions of compensation. Working conditions, safety concerns or questions about worker rights, regularly surface and must be resolved.
Too often, we approach contract negotiation with a narrow mindset, assuming we will be fighting with our counterpart to grab as much as we can. Rather than looking for ways to expand the pie, we focus on carving it up. Rather than capitalizing on our different preferences, we accept impasse. By contrast, when parties can trade on their preferences across different issues, they reduce the need to haggle over price and percentages.
Don’t make another bad deal. In business, the stakes are too high and the consequences are too severe to allow a bad deal to pass your desk.
To find out more and discover how to boost your power at the bargaining table, download a complimentary copy of our special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School right now!
We will send you a download link to your copy of the report and notify you by email when we post new business negotiation advice and information on how to improve your dealmaking skills to our website.
Negotiations over the terms and conditions of a binding legal agreement between two or more parties.
The following items are tagged contract negotiation:
Business Negotiation Strategies: How to Negotiate Better Business Deals
Written by some of the nation’s foremost experts in negotiation, Business Negotiation Strategies: How to Negotiate a Better Business Deal gives you the tools you need to navigate even the stickiest business deals.
… Read More
Can AI Mediation Help Bridge Political Divides?
A form of AI mediation outperformed human mediators in a recent large-scale study. Although AI mediation could have broad real-world applications, its limitations need to be considered.
… Read Can AI Mediation Help Bridge Political Divides?
Win-Win or Hardball?: Learn Top Strategies from Sports Contract Negotiations
In this Special Report, we offer advice from the world of sports to help you navigate your most important negotiations. You will learn to get your head in the game, manage team dynamics, and get a competitive edge.
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Contract Negotiation Skills: Setting Yourself Up for Success
Our contract negotiation skills need to go beyond getting a great deal in the short term. As failed partnership on Covid-19 vaccine production illustrates, strong safeguards and oversight are needed to ensure long-term success.
… Read More
Mediation Checklist: 5 Questions to Ask When Hiring Mediators
Are you hiring a mediator? When considering a potential mediator, create a mediation checklist and ask the following questions of those who have worked with him in the past.
… Read More
What is an Arbitration Agreement?
If you have ever owned a cell phone or been issued a credit card, odds are you’ve signed an arbitration agreement. You also may have signed an arbitration agreement when you started your current job or a past one, whether you remember doing so or not.
… Read What is an Arbitration Agreement?
How to Negotiate in Good Faith
Have you ever negotiated with someone who seemed intent on sabotaging the negotiation or taking unfair advantage? If so, you would benefit from learning more about what it mean to negotiate in good faith.
… Read How to Negotiate in Good Faith
Employment Contract Negotiation: Morals Clauses
Employment contract negotiation in some industries involves the negotiation of morals clauses—an increasingly common way for organizations to protect themselves from employee misbehavior.
… Read Employment Contract Negotiation: Morals Clauses
How to Negotiate Mutually Beneficial Noncompete Agreements
If you’re looking to get more leverage out of your next job negotiation, the noncompete agreement that may very well be tucked inside your employment contract could provide an opportunity to achieve the mutually beneficial win-win situation you desire.
… Read More
Labor Relations: Negotiating Collective Bargaining Agreements
Contract bargaining in labor relations is one of the most complex areas of negotiation and dispute resolution. There are rarely clear cut or mutually agreed upon notions of what a fair salary and benefits package would be, so employers and workers, either individually or collectively, often find themselves at odds. Furthermore, contract bargaining in a … Read More
What Leads to Renegotiation?
Renegotiation is generally triggered for one of two reasons: an imperfect contract or changed circumstances. The goal of any written contract is to express the parties’ full understanding of their deal.
… Read What Leads to Renegotiation?
Does Your Negotiation Process Need Improvement?
An inefficient negotiation process wastes time and money. To create a negotiation process that eliminates headaches and leads to win-win deals, take a page from the NFL’s playbook.
… Read Does Your Negotiation Process Need Improvement?
Teaching Contract Negotiation: Using the Mutual Gains Approach
How do you use the mutual gains approach in contract negotiations?
In contract negotiations, parties can often resort to positional bargaining instead of using the mutual gains approach. Teaching students to generate creative options in contract negotiations can help them avoid positional bargaining and achieve more beneficial and sustainable agreements. The Teaching Negotiation Resource Center (TNRC) … Read More
High Stakes Negotiations in the Healthcare Industry
Teach Your Students to Negotiate One of the Most Critical Global Industries
With the COVID-19 pandemic devastating communities around the world, the acute importance of the healthcare industry to community welfare has become even more apparent. Healthcare is one of the biggest economies in the world, with billions of dollars spent on treatments and associated research. … Read More
Negotiation Research Examines Ethics in Negotiating
Lack of transparency regarding negotiations between hospitals and the insurers known as preferred provider organizations, or PPOs, is a key contributor to spiraling health-care costs in the United States, back in a 2013 article in the New York Times. This topic has many questioning ethics in negotiating within the healthcare industry.
The problem starts with the … Read More
Learning from M&A Negotiation Strategy
Business negotiators across industries can absorb key lessons from mergers and acquisitions (M&A) negotiation strategy—including choosing the right negotiating partners, considering the role of outside parties, and preparing for effective deal implementation.
… Read Learning from M&A Negotiation Strategy
Dear Negotiation Coach: How Do I Handle Reverse Auctions in a Business Contract Negotiation
Reverse auctions are becoming a more frequent reality of business contract negotiations as companies work to cut expenses. In most negotiations, however, price is not the only issue. Guhan Subramanian, Joseph Flom Professor of Law & Business at Harvard Law School and Douglas Weaver Professor of Business Law at Harvard Business School, answered a question … Read More
Digitally Enhanced Simulation Packages – With Live Data Analytics
In-depth Teaching Materials with Real Time Data Analytics Designed to Enhance Teaching Negotiation
From the Teaching Negotiation Resource Center (TNRC) at PON, and iDecisionGames: digitally enhanced simulation packages designed to take your teaching to the next level.
The Enhanced Simulation Package from the TNRC and iDecisionGames brings a new, interactive learning experience to teaching negotiation. This easy … Read More
The Best Negotiation Exercises, Simulations and Videos
Have you planned your curriculum and purchased your teaching material for next semester? We’re here to help you to find the best negotiation exercises and teaching aids for your negotiation classes.
… Read More
In Contract Negotiation, Wise Business Negotiators Sweat the Small Stuff
What are business negotiators responsible for in contract negotiation? Many would say they’re in charge of building relationships and new business, crafting creative solutions, and fighting for the best deal possible. Few, however, would say they’re responsible for ensuring that the deal holds up well over time.
… Read More
In Employment Contract Negotiation, “No Haggling” Isn’t the Answer
Back in spring 2015, Ellen Pao, the former CEO of social networking and news website Reddit, revealed in an interview with the Wall Street Journal that her company had taken a bold move in its efforts to create an “equal opportunity environment for everyone” at the company. Specifically, Reddit no longer negotiates salary with job … Read More
Negotiation Skills in Business Communication – Use Chaos to Your Advantage at the Bargaining Table
Some of the most successful negotiation examples that we have covered here include negotiators engaging in improvisation at the negotiation table, turning chaotic situations into advantages in negotiation scenarios.
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How to Use MESOs in Business Negotiations
It’s not uncommon in business negotiations to find yourself on the brink of impasse. You and your counterpart have exchanged a series of offers and counteroffers, and you’ve met somewhere close to the middle—but not close enough. With each side firmly rooted in its position, there may seem to be no way forward.
… Read How to Use MESOs in Business Negotiations
Mutually Beneficial Agreements: Tips for Creating Deals that Last
David Schwimmer, the actor who played Ross on the hit television comedy Friends, famously convinced the show’s five other leads in the early years of its run to negotiate their contracts with NBC as a team. The “mini union” formed by the actors ultimately helped them negotiate an unprecedented $1 million each per episode during … Read More
Contract Renegotiation in a Time of Crisis
The COVID-19 pandemic has left many of us negotiating circumstances we never envisioned just months ago, from health crises to lost jobs to plummeting sales. Businesses of all sizes, in particular, are faced with the difficult task of contract renegotiation as a result of parties’ inability to meet current deal terms.
Unfortunately, contract renegotiation is much … Read Contract Renegotiation in a Time of Crisis
Teach Your Students Cross-Cultural Negotiation
As our world grows increasingly interconnected, we are more likely to find ourselves negotiating in a cross-cultural context. The diverse makeup of many societies and global nature of business today make cross-cultural negotiation a regular part of life. Also, unfortunately, many major disputes in need of resolution cross ethnic and cultural lines. Furthermore, it is important … Read Teach Your Students Cross-Cultural Negotiation
The Wired Negotiator: Using Technology in Negotiation
Everyone negotiates every day. How we negotiate is changing dramatically due to the use of various technological tools. People need not fear this change. Rather, they should understand the different technology at their disposal, grasp the pros and cons, and determine how to select the best medium to suit their needs, negotiation style, and approach. … Read More
4 Negotiation Tactics Robert Kraft Used to End the NFL Lockout
Robert Kraft, owner of the New England Patriots, was by all accounts a major factor in getting the NFL collective bargaining agreement signed earlier in October 2011. To do so, Kraft employed four key negotiation tactics to help the players and owners come to a “win-win” solution.
… Read More
Bargaining at a Fever Pitch
Have you ever won an auction only to realize later that you overbid for the prize? In competitive bidding situations, it’s easy to get carried away in the heat of the moment and overpay. The Boston Red Sox 2006 procurement of Japanese pitching phenomenon Daisuke “Dice-K” Matsuzaka offers a lesson in keeping cool in these … Read Bargaining at a Fever Pitch
Conflict Negotiation Strategies for Business Negotiators
When closing a deal, new business partners are typically optimistic about the path ahead. But somewhere down the line, conflict is almost inevitable. One party may miss a deadline. The two sides may interpret contract terms differently. Changing economic conditions may make it difficult for one side to uphold its end of the deal.
When a … Read More
Teach Your Students to Negotiate the Principal-Agent Relationship with Fie’s Agent
Negotiate International Sports Contracts
In many business negotiations, especially those involving athletes, you will find an agent negotiating on behalf of the principal party. This unique principal-agent relationship can cause challenges at the negotiating table. The agent may have different preferences from their principal party. Agents may also have different incentives from the principal. Agents may … Read More
Negotiate International Energy Contracts with ENCO
ENCO: Negotiating International Contracts in the Face of Political Instability
Negotiating international contracts can be tricky, and unstable, especially when governments are parties in the negotiation. ENCO is a Texas-based power company that has begun to move aggressively into emerging markets. The Indian government has approached ENCO to build an electrical generating plant to increase the power … Read More
Beware Your Counterpart’s Biases
In the past we have encouraged you to ‘debias’ your own behavior by identifying the assumptions that may be clouding your judgment. We have introduced you to a number of judgment biases – common, systematic errors in thinking that are likely to affect your decisions and harm your outcomes in negotiation. Learn how to identify … Read Beware Your Counterpart’s Biases
Creating and Claiming Value Through Haggling – Assess The Other Party’s BATNA in Dealmaking Negotiations
Now it’s time to assess the best deal you might get. Figuring out the other party’s reservation price is the key to knowing how far you will be able to push him, write Deepak Malhotra and Max H. Bazerman in their book Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining … Read More
Contract Negotiations: Before You Sign on the Dotted Line
When times are tight, contracts are often broken. These days, parties on both sides of sales agreements are struggling to fulfill their promises, and contract workers are having trouble getting paid by their employers.
… Read More
In The Simpsons Dealmaking, Harry Shearer Goes Public
How did actor Henry Shearer and the producers of the hit television show The Simpsons arrive at a win-win negotiated agreement? In this article drawn from examples of negotiation in real life, we examine the negotiations between the actor and the producers and offer insights into the bargaining strategies employed by each.
… Read More
Will you behave ethically?
A lack of transparency regarding negotiations between hospitals and the insurers known as preferred provider organizations, or PPOs, is a key contributor to spiraling health-care costs in the United States, according to an August article in the New York Times.
The problem starts with the somewhat arbitrary, sky-high prices that hospitals put on their supplies and … Read Will you behave ethically?
Got a raw deal? Renegotiate a better one
Many viewed the deal to be a terrible one from the start. In December 2008, Richard M. Daley, then Chicago’s mayor, announced that his administration had agreed to lease the city’s parking meters for 75 years to a private company for nearly $1.2 billion in an attempt to tackle a budget shortfall of about $500 … Read Got a raw deal? Renegotiate a better one
What to Do Before the Deal Breaks Down
Whenever one side fails to meet its contractual obligations, renegotiation is more likely to succeed if the parties have a strong relationship. Ideally, the aggrieved party will value long-term relations more than potential gains from a claim for breach of contract. For example, a bank will be more willing to renegotiate a loan with a … Read What to Do Before the Deal Breaks Down
Training for Non-Face-to-Face Negotiations
Negotiating by email poses a set of challenges that one doesn’t often encounter in face-to-face negotiations.
Without the benefit of seeing your counterpart’s body language, what one person might intend to be a straightforward request the other might perceive to be rude.
A legitimate delay responding to an email offer by one party might be construed … Read Training for Non-Face-to-Face Negotiations
Successful negotiation strategies lead to bright future for 2011 Stanley Cup Champion Boston Bruins
As Zdeno Chara, the captain of the Boston Bruins, hoisted the Stanley Cup at the conclusion of the 2011 Stanley Cup playoffs, fans could celebrate with abandon, secure in the knowledge that their star defenseman will be wearing black and gold through the 2017-2018 season. Without the last minute contract extension signed days before … Read More
Help Your Organization Do More with Less
Adapted from “How to Do More with Less,” by Lawrence Susskind (professor, Massachusetts Institute of Technology), first published in the Negotiation newsletter.
Times are tough, and managers need to find a way to squeeze more out of every contract negotiation. How can you improve how your organization negotiates?
Though we tend to think of negotiation as an … Read Help Your Organization Do More with Less
The negotiating QB
Adapted from “The Brett Favre Trade: A Win-win Deal in a Win-lose Game,” first published in the Negotiation newsletter.
In the middle of the National Football League’s off-season, as legendary quarterback Brett Favre weighs for the third year in a row whether to return to football or accept retirement, it’s worth revisiting the negotiations behind his … Read The negotiating QB
Pharma talks
The PON Clearinghouse offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. The following role simulation is a three-party, multi-issue contract negotiation among representatives for an HMO and two pharmaceutical companies over the purchase of a new antidepressant drug.
SCENARIO: Hopkins HMO is the largest independent managed health care organization in the … Read Pharma talks
Salvaging the deal
The Clearinghouse at PON offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. Tendley Contract is a two-party integrative contract negotiation between a computer consultant and a school district representative at an apparent impasse over different expectations over cost of services.
SCENARIO: A school district and a computer consultant are negotiating a … Read Salvaging the deal
Winners of Harvard Law School’s 57th annual Williston Competition Announced
Winners of Harvard Law School’s 57th annual Williston Competition, Harvard’s annual contract negotiation and drafting competition for first-year law students, were announced on Monday, April 5.
This year’s winners were:
Best Contract Overall: Russell Herman, David Roth, Kristi Jobson and Aaron Dalnoot
Best Representation of Save Our Square: Fentress Jamal Fulton and Betny Townsend
Best Representation of McMillin’s: Adam … Read More
How to Avoid a Do-Over
Remember that big sales contract you negotiated last fall, the one that got you a fat year-end bonus? Well, your manufacturing department has just told you that delivery will be two months late. So now it’s your job to persuade your customer to accept a new date without canceling the deal. And that’s not all. … Read How to Avoid a Do-Over
Insights from a Communication and Negotiation Conference: The Benefits of Not Knowing
An Experiment: Exploring Interdisciplinary Linkages between Negotiation and Communication Studies
What would negotiation pedagogy look like if we focused more on the core meanings and practices of communication? How can understanding the underpinnings of communication – the components of conversation and the exchange of meaning – help us understand and improve our negotiations? The weekend of … Read More
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